American electric utilities are increasingly turning to wind energy, locking in lower-than-ever long-term fixed prices and reaping the benefits for stakeholders, customers, and their bottom line.
Recent announcements underscore the trend:
Xcel Energy announced in May the results of a request for proposals for wind energy that the company issued in March. Pending contract negotiations, further evaluation and regulatory approval, the company could acquire up to 550 additional megawatts of low-cost wind energy in Colorado. Facilitated by the extension of the federal Production Tax Credit, Xcel Energy said, wind power is now competitively priced with other forms of generation, allowing the utility with the most wind power on its system in America to further increase its wind generation.
MidAmerican Energy announced plans in May to add up to 1,050 MW of wind generation, consisting of up to 656 new wind turbines, in Iowa by year-end 2015. The company indicated that this latest expansion of wind power will enhance economic development and provide in excess of $360 million in additional property tax revenues over the next 30 years.
The Michigan Public Service Commission approved two power purchase agreements for wind projects in that state to supply wind energy to DTE Energy, the state’s largest utility, allowing the utility to meet RPS requirements one year early. This led to a plan filed in early June that will allow DTE Energy’s filing a plan this month to reduce a renewable energy surcharge for their residential customers from three dollars to 43 cents, saving its customers $90 million. That was based on the declining cost of wind power – driven by improved wind turbine technology and the extension of the production tax credit, DTE Energy noted in its filing.
American Electric Power Co. (AEP) subsidiary Public Service Co. of Oklahoma on June 10 issued a request for proposals seeking long-term purchases of up to 200 MW of Oklahoma wind energy.
Oklahoma Gas & Electric Co. (OG&E) this month credited its purchases of wind energy with helping to avert the need for new fossil fuel plants, in a press release announcing it had won the electric power industry’s most prestigious honor, the Edison Award from the Edison Electric Institute. “OG&E is being recognized for its distinguished leadership, innovation and progress in advancing smart technologies to power the future,” EEI President Tom Kuhn said, “executing its vision of a more energy-efficient and environmentally sustainable future enabled by technology.”
Utilities are increasingly recognizing how wind energy in their portfolio provides a hedge against volatile prices for fossil fuels, since wind energy carries zero fuel price risk. Last year, for the first time ever, wind power was the largest source of new electric generating capacity in the U.S., installing 42 percent of all new capacity in 2012 and 36.5 percent of all new generating capacity over the past five years.
At the end of 2012, the top five electric utilities with wind power capacity on their systems were Xcel Energy; MidAmerican Energy (including PacifiCorp); Southern California Edison; Pacific Gas & Electric; and American Electric Power.
Eight utilities currently purchase or own more than 1 GW of wind power each. In all, more than 1,400 U.S. utilities now purchase or own wind power directly or through wholesale electric power providers – including joint action agencies, generation and transmission cooperatives and other authorities. This means over 43 percent of the 3,250 electricity providers in the U.S. now have wind energy in their generation mix.
Helping to drive the drop in wind power prices is the larger wind-swept area of longer turbine blades and taller wind towers, along with domestic production close to installation sites, improvements in turbine design, resulting higher operating capacities. Such technological advances not only increase output at sites historically known for rich wind resources, but also open up new areas to development of economically feasible wind farms. That gives an ever-growing number of utilities a newly cost-effective option to get more wind energy.
At the American Wind Energy Association (AWEA) Utility Working Group meeting, held during the WINDPOWER 2013 Conference and Exposition in Chicago last month, two more trends emerged: a growing number of utilities who operate and maintain their own wind turbines, and the impact of large, corporate purchasers of wind energy.
“Utilities’ entry into O&M underscores their growing confidence in, and understanding of, wind energy as a resource that can comprise a larger portion of their energy mix,” said Jeff Anthony, AWEA’s Senior Director of Membership and Business Development. “These topics will be front and center for additional work by the Utility Working Group.”
Many utilities have also reported significant and sudden interest in the past few months from large corporate and industrial customers interested in obtaining large amounts of wind energy to power their operations, demanding more options than ever before from their electric utilities.
“Well-known Internet and technology companies such as Google, Facebook and Apple have all made announcements recently along these lines. Our utility members agree that this trend will only increase,” Anthony said. “AWEA will be working with them to devise practical business models so they can meet these requests.”
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